This is more than a summary of the 2011 Budget and the 2011 Finance Bill: we also include the key measures that have been proposed in earlier Budgets that are due to take effect in 2011/12.
Subscribers: if you are after more than a summary go to our Finance Bill planner for a rolling summary of 2011-12 and beyond.
All measures are for 2011-12 unless otherwise indicated.
Income tax
From 2011-12:
- The personal allowance for under-65s will be increased by £1,000 to £7,475.
- The basic rate limit will be reduced by £2,400 to £35,000.
See IT tax rates and allowances
It has also been announced that for 2012 and beyond:
- The 50% tax rate is not be made permanent.
- Following a new consultation, long term resident non-domiciled individuals may face a £50,000 charge to stay within the remittance basis.
- We may see the introduction of a statutory residence test.
National insurance
From 2011-12
- The Employee rate increases to 12%
- The Employer rate increases to 13.8%
- The Self-employed rate increases to 9%
- The earnings bands and limits are increased.
Corporation tax
For 2011-12
- Main Corporation tax rate down to 26%
- Small company rate down to 20%
- The marginal tax rate becomes 27.5%
See Company tax rates and allowances
Also:
- The associated companies rules are amended from 1 April.
- From 1 April 2011 companies must file accounts in iXBRL format and pay their tax electronically.
- IR35: no changes but HMRC will provide better guidance and a dedicated help-line.
Capital gains tax
From 2011-12
- The annual allowance increases to £10,600.
- Entrepreneurs’ Relief increases to £10 million.
Enterprise Investment Scheme (EIS)
From 2011-12
- Tax relief on qualifying EIS investments increases to 30%
From 2012-13
- Annual investment limits doubled
See Enterprise Management Incentives (EMIs)
ISAs
- The annual savings limits increases to £5,340/£10,680
- In the Autumn a Junior ISA will be launched for children.
See Savings & ISAs
Capital allowances
From 2012
- Capital allowances: short-life assets cut off increased to 8 years.
- The Enhanced Capital Allowances scheme includes new items.
See Capital allowances: rates and allowances
Furnished Holiday Letting
From 2011-12
- A restriction of sideways loss relief.
- A permanent extension of the FHL regime to EEA FHLs.
From 2012-13
- Increase in qualifying letting (105 days) and availability periods (210 days).
- A "period of grace" provisions apply from 2010-11: a FHL which meets the occupancy threshold in one year, may elect to be treated as having met the occupancy threshold in each of the following two years.
Small company Research and Development Relief
From 2011-12
- Doubled to 200%
See Research & Development Relief
VAT
From 2011-12
- Registration threshold up to £73,000
- Deregistration thresholds up to £71,000
See VAT registration/deregistration thresholds
Employee Benefit Trusts, EFRBS and disguised remuneration schemes
Amounts advances or made available (such as cash loans or assets) become subject to PAYE.
- EFRBS subject to pensions savings restrictions
See Employer-Financed Retirement Benefits Scheme (EFRBS)
Salary sacrifice
- Free lunches: the tax-free exemption for employer provided meals will not apply where entitlement arises out of a salary sacrifice or flexible working arrangement.
Pensions
- The pensions savings annual allowances reduces to £50,000.
- The rules to purchase an annuity by age 75 are modified from April 2011.
- See Pensions: tax rules and planning
Business motoring
From 2011-12
- Approved mileage allowances increased from 40p to 45p per mile, volunteer drivers may claim actual expenses.
- The £80,000 upper limit no longer applies in calculating employee company car benefit.
- The car fuel benefit multiplier rises to £18,800.
Employer supported childcare
- A reduction in childcare relief for higher earners (for new participants only) from 6 April 2011.
- Childcare vouchers and other childcare: salary sacrifice and national minimum wage - rule that scheme must be open to all employees abolished.
See Childcare and childcare vouchers
Stamp duty land tax
From 2011-12
- A 5% higher rate for residential properties costing more than £1 million.
- SDLT relief continues on properties costing up to £250,000 for first time buyers
See Stamp Duty & Stamp Duty Land Tax
Inheritance Tax
- No changes to rates and allowances in 2011-12.
- From 2012: donate 10% to charity and your IHT rate decreases by 10% too (that means 40% falls to 36%).
Misc. Business & investment measures
- 21 new Enterprise Zones to be created with relaxation on planning, increases in renovation allowances.
- Small business rate relief continues until September 2012.
Gift Aid
- Charities (and community amateur sports clubs) need to set to work immediately to ensure that they are fully compliant in anticipation of changes to Gift Aid in 2013 - see Gift Aid: Budget 2011 measures.
- From 6 April 2011 the limit on the total value of benefits that individuals and companies may receive as a result of making donations to a charity (or a community amateur sports club) of more than £10,000 in a tax year will increase from £500 to £2,500.
Over the next few years measures are being introduced to make Gift Aid easier to administer.
Tax administration & simplification
- 43 complex tax reliefs to be abolished
- IR35: HMRC to provide better guidance and a dedicated help-line
- A review and crack down on SDLT, CGT and income tax avoidance.
- Reform of NICs: the government will consult on a proposed merger of income tax and National Insurance contributions (NICs).
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